Why Multi-Asset Funds Are Quietly Beating Equities – And What Investors Can Learn

Mumbai | October 9

Markets Are Volatile. Diversification Is Back.

When markets turn uncertain, capital often chases safety — and this year, the winners haven’t been tech or small-caps, but multi-asset allocation funds. While benchmark indices have drifted sideways, these hybrid portfolios — blending equities, debt, and commodities — have delivered 9–13 % returns over the past 12 months. Part of that success comes from gold’s 47 % surge, but Inderbir Jolly, who heads wealth management at PL Capital, believes there’s more to the story.

“Gold has certainly lifted returns, but the real advantage comes from balance,” Jolly explains. “Allocations across debt, equity, and alternatives have helped these funds absorb shocks better than single-asset portfolios.” In Q1 FY26, when equities remained weak, gold and debt allocations became the quiet stabilisers, keeping portfolios in the green.

The Case for Multi-Asset Funds in Investor Portfolios

Jolly believes the current phase of the market — marked by stretched valuations and uneven earnings — makes a strong case for broader diversification. “Multi-asset strategies remove the burden of timing. Investors stay invested through cycles without reacting to every correction,” he says.

Several leading schemes have delivered 15 %-plus CAGR over five years, outperforming many large-cap and hybrid peers on risk-adjusted metrics. For long-term investors, he adds, this structure “balances growth and protection — two things investors shouldn’t have to choose between.”

How to Pick the Right Multi-Asset Fund

For those looking to build exposure, Jolly suggests a structured checklist:

1. Allocation flexibility – Look for funds that can shift dynamically between equity, debt, and gold.
2. Cycle resilience – Review performance during both bull and bear markets.
3. Risk metrics – Examine standard deviation, drawdown history, and Sharpe ratios.
4. Costs and taxation – Expense ratios and post-tax returns matter as much as headline gains.
5. Portfolio fit – Match the fund’s style with your own risk tolerance and time horizon.

“Chasing short-term leaders rarely works,” Jolly cautions. “It’s consistency across cycles that compounds wealth.”

Macro Undercurrents Are Shaping This Shift

The renewed enthusiasm for balanced portfolios comes against a changing macro backdrop:

• Gold ETFs in India have crossed $10 billion in assets, according to Reuters — a record high amid rising risk aversion.
• Equities remain range-bound, with foreign flows turning patchy as global yields shift.
• Investors are rotating to defensives, seeking steady, tax-efficient returns.

These dynamics have made multi-asset funds attractive to investors who once preferred pure equity exposure. “If gold corrects, a pure-play investor takes the full hit,” Jolly points out. “A diversified fund absorbs that fall.”

Outlook:

As 2025 heads into its final quarter, the narrative is shifting from chasing high beta to protecting capital. Jolly expects balanced allocation models to outperform aggressive single-asset bets over the next 12–18 months.

“We’re entering a period where patience will be rewarded,” he says. “Multi-asset funds may not be flashy, but they’re built for longevity — and that’s what ultimately compounds wealth.”